Closing Loopholes To Keep Jobs in America

April 19, 2012

Farbod Kadkhoda

Just as public works projects launched by FDR put millions of unemployed people to work during the Great Depression, the Obama administration has pushed to invest billions in public works projects to create jobs for millions of today’s unemployed. But many of the dollars that are intended to create those jobs are instead creating jobs overseas.

As President Obama said in a speech in September, “Building a world class transportation system is part of what made us a economic superpower. And now we are gonna sit back and watch China build newer airports and faster railroads at a time when millions of unemployed construction workers could build them right here in America?”

But when California received over $7 billion in federal funds in order to construct the state-of-the-art San Francisco-Oakland Bay Bridge, significant portions of the bridge’s construction were set to be manufactured in China. China Construction America has become a frequent presence in New York City after it was put in charge of a $407 million project to renovate the Alexander Hamilton Bridge. The Alaska Railroad Company is flirting with the using part of its $190 million in federal funding to build the Tanana River Bridge Crossing to outsource work to a Chinese company.

Due to lax labor standards in China, many American companies continue to lose construction bids because they are unable to match the Chinese companies’ drastically lower prices. “There is no way that American workers will be able to ever compete with $12 a day,” said Bob LaVenture, a district director for the United Steelworkers Union, in an interview with NPR.

Contracting infrastructure projects abroad has significantly undermined our efforts to rebuild our economy by reducing domestic unemployment and revitalizing our manufacturing base. In California alone, where unemployment is projected to remain above 10% this year, outsourcing in public workers projects is estimated to have cost some 3,000 jobs.

Foreign sourcing of government-funded projects has been discouraged for over 70 years through Buy America legislation, which sets sourcing requirements to federal procurements. But in many cases legally required commitments to American workers have been subverted through elaborate loopholes. One significant way that domestic agencies have avoided their commitments is through a process known as “segmentation.” This involves agencies cutting large projects into numerous segments, some of which would only receive state funding and therefore not be subject to Buy America restrictions. In the case of the San Francisco-Oakland Bay Bridge, the job was split into nine parts, only two of which were restricted by Buy America provisions.

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Just as public works projects launched by FDR put millions of unemployed people to work during the Great Depression, the Obama administration has pushed to invest billions in public works projects to create jobs for millions of today’s unemployed. But many of the dollars that are intended to create those jobs are instead creating jobs overseas.

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